May 24, 2011 BEIJING - FUJI Heavy Industries has agreed in principle to make Subaru vehicles in north-east China with Chery Automobile, the country's largest independent automaker, two people with knowledge of deal said on Tuesday.

　　The Chery tie, if it goes ahead, would give the Japanese automaker a foothold in the world's largest auto market, joining the ranks of General Motors and Volkswagen , which had already carved up a major chunk of market.

　　'Chery and Fuji have agreed on the major terms and conditions of making Subaru in the city of Dalian and are now communicating with Chinese regulators to seek their endorsement,' one person briefed on the matter told Reuters.

　　The terms and conditions were similar with what had been previously reported, the person said.

　　The Nikkei business daily reported in late 2010 that the two companies were in advanced talks to build a 30 billion yen (S$456 million) China plant, with initial annual capacity of 50,000 units, rising to 150,000 eventually.

　　New auto manufacturing ventures in China need to be approved by government bodies, including the top economic planner, the National Development and Reform Commission, and the Ministry of Industry and Information Technology, which oversees major industry policies.